German biodiesel output slackens with new biofuels taxes

By | April 25, 2007
For a number of years, Germany has been recognized as the world leader in the international biodiesel arena, which is why recent statistics from the German biodiesel industry association Verband der Deutschen Biokraftstoffindustrie e.V. (VDB) are somewhat startling. According to VDB, German biodiesel production has declined by 30 percent to 40 percent since the beginning of 2007, following the government's decision to reduce a biofuels tax incentive at retail fuel stations in August 2006. At the same time the tax incentive was reduced, the price of fossil fuels plummeted, making it more attractive to consumers and thus edging biodiesel's price advantage. However, the European Union has mandated the use of renewable fuels in its member countries, including Germany.

Many farmers who had been running their equipment on B100 are now buying diesel, but the tax on biodiesel is not all bad, said Robert Hermann, director for renewable energies and resources for Invest in Germany. His organization aids international investors looking to locate operations in Germany by providing information and council. It is funded by the Federal Ministry of Economics and Technology. "My personal perspective, which is also that of my company, is that change is not negative," Hermann said. "The tax incentive has been reduced to zero at the same time they have introduced mandatory blending, so the [BPs] and the Shells are now forced to blend biofuels with their fuel, including biodiesel."

The current biodiesel fuel tax will continue to rise in stages from 0.09 to 0.45 (US 0.12 cents to US 0.5 cents) per liter by 2012. Hermann said the percentage of biodiesel required to be blended with diesel fuel will also rise within the next six years-from 6.25 percent energy content in 2009 to 8 percent in 2015.

Despite the VDB's concern for biodiesel's ability to compete, Hermann said the government made the decision to implement the tax because it aims to encourage regular competition and similar prices among fuels at the pump, and because it knows biodiesel isn't going to disappear. "The growth curve may slow a little bit, but the market is there because of the mandate," Hermann said.
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